Competition in the Dutch market for SME loans from banks is suboptimal and has decreased in the past few years, a report by the Netherlands Authority for Consumers and Markets (ACM) has revealed.
The report found that this was because of high barriers to entry, a limited number of banks active in the market and alternative sources of funding exerting little competitive pressure.
Go deeper with GlobalData
Most of the loans to SMEs are taken out from the three major Dutch banks: ABN AMRO, ING and Rabobank. According to ACM, several foreign lenders have ceased operations in the Netherlands in recent years.
"As many SMEs rely on external funding for running their businesses, it is particularly important that there is sufficient competition in the market. A lack of competition could lead to higher funding costs for SMEs, worse service from banks, and less innovation," wrote ACM.
The ACM report said there is a risk that the three largest banks might "tacitly coordinate" their market behaviour.
ABN AMRO commented on this risk: "ABN AMRO emphatically denies that the bank is involved in any tacit coordination. The bank also considers the risk of this happening to be very minor. The available information about market shares does not offer sufficient grounds for drawing conclusions about how individual offered rates relate to each other."
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataACM called for the government to make sure that new and existing regulations and guarantee schemes did not have a restrictive effect on the market, in order to stimulate the growth of alternative sources of funding.
Chris Fonteijn, chairman of the board of ACM, said: ‘In order to solve this problem, the government must stimulate the entry of new providers as well as the growth of alternative sources of funding. Furthermore, it is also important that banks are clearer about the interest rates that SMEs need to pay.’
ABN AMRO replied: "ABN AMRO shares the ACM’s view that transparency is important. The bank’s website shows the rates that are the same for all clients: the basic interest rate, for example. In addition to these rates, every interest rate composition includes an individual risk mark-up that is linked to the client’s risk profile. Being customised to the specific client, these mark-ups vary by definition."
